re: junior oilers 17/18 may for russellfji
Hi Russell, Sorry didn't make myself too clear on PSA. The option is to sell PSA ahead of the two wells at West Cameron and realise some profits. If one or both wells come up dry then you could expect the shares to retrace which would give me the opportunity to buy back in to a stock I think has a great longer term future, at a lower price. If the wells are successful then the share price will reflect that success and I will have to pay more for the shares to get back in again. Lets for arguments sake say the upside for two successful wells is 10 cents per share, but the downside for two unsuccessful wells is 20 cents a share. I am risking a 20 cent loss for a 10 cent gain. What I do inthe end will depend on how liquid the market is at the time (I have a lot of stock which is difficult to off load in one hit without influencing the price); the price of the stock as we approach drill time; my assessment of the likelihood of success; my assessment of the impact on the share price of the result being positive or negative; my assessment of the time it would take the stock to recover from a duster (s); etc, etc. I have to say I held the stock through the drilling of the first three wells and right now am reasonably confident they will find what they are after with the next two. They are after all drilling on an old field, have good 3D seismic which has delineated the targets and will drill from the 352 platform so the costs are not high. In the longer term I expect PSA to make me a lot of money but there may be times on the road to riches when it may be prudent not to hold through a drilling program. After all the key to success in this sector is to preserve ones capital at all costs. For example I would not be holding Amity through the current drilling program. On the other hand I may hold BUY through Leafcutter unless there is a sufficient pre drill rise to entice me to sell down ahead of the well going down. Hope this helps. I am no expert at this game. Cheersw JBC
